For a long time the UK's small businesses have kept their heads down, viewing the future with caution. But now it seems as though the UK's small and medium-sized enterprises (SMEs) have got some of their impetus back, with confidence at an all-time high.
According to the latest Small Business Index, a survey run by the Federation of Small Businesses (FSB), SME confidence reached a balance of +41 points in the third quarter of this year – the first time confidence has hit this level. Positive feeling ran through all sectors of SME business, with each area recording a positive outlook for the next three months.
This survey marks the seventh consecutive month that UK SMEs have been positive about the future. As a result, three-fifths of businesses surveyed (61%) declared that they expected their business to grow over the next year, while one in 10 (11%) had even higher expectations with rapid growth expected over the next 12 months.
Turnover expectations were also on the up, with one third of businesses (33%) expecting their turnover to increase, while almost a fifth (17%) believe that their profits will also rise.
The most confident region is the South East, with a confidence score of +52. However, the North East showed the greatest confidence boost compared with a year ago. Confidence is now ranked at +44, compared to a dismal -7 during the same period last year.
The financial sector ranked itself as the most confident about its place in the future, with a score of +62, but the sectors that witnessed the most improvement were the health and social spheres and the hospitality industry. This demonstrates that confidence is widespread across SME industries, and not restricted to a lucky few.
The growing confidence of SMEs has supported their desire for growth, particularly in terms of recruitment, which is now at an all-time high.
A net balance (+5%) of small firms increased the number of employees working for them over the last three months, while 7% of firms anticipate increasing their staff numbers by the end of the year. This suggests that job growth is likely to steam through the rest of the year, allowing SMEs to grow.
SMEs "spearhead" the economy, so their desire for expansion needs to be supported. However, barriers to growth in the form of the domestic economy, weak consumer demand and skills shortages are blocking SME aspirations. John Allen, national chairman of the FSB, said: "As we head into party conference season, we'll be looking to all the political parties to spell out what they will do to encourage job creation, investment and reward entrepreneurs in the next Parliament."
Keeping business costs down and managing cash flow problems are key to SME growth. If you're feeling confident about your business' future, why not look into supporting your expansion with some financial help? If it's time to move to a bigger premises, a commercial mortgage could be the answer, or perhaps you could try a bridging loan, a form of finance that is growing in popularity. If late payments are holding you back, invoice factoring could be the solution – check out our tables to find out if it would suit your business.
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